A Burgeoning Crisis? A Nationwide Assessment of the Geography of Water Affordability in the United States

Abstract

While basic access to clean water is critical, another important issue is the affordability of water access for people around the globe. Prior international work has highlighted that a large proportion of consumers could not afford water if priced at full cost recovery levels. Given growing concern about affordability issues due to rising water rates, and a comparative lack of work on affordability in the developed world, as compared to the developing world, more work is needed in developed countries to understand the extent of this issue in terms of the number of households and persons impacted. To address this need, this paper assesses potential affordability issues for households in the United States using the U.S. EPA’s 4.5% affordability criteria for combined water and wastewater services. Analytical results from this paper highlight high-risk and at-risk households for water poverty or unaffordable water services. Many of these households are clustered in pockets of water poverty within counties, which is a concern for individual utility providers servicing a large proportion of customers with a financial inability to pay for water services. Results also highlight that while water rates remain comparatively affordable for many U.S. households, this trend will not continue in the future. If water rates rise at projected amounts over the next five years, conservative projections estimate that the percentage of U.S. households who will find water bills unaffordable could triple from 11.9% to 35.6%. This is a concern due to the cascading economic impacts associated with widespread affordability issues; these issues mean that utility providers could have fewer customers over which to spread the large fixed costs of water service. Unaffordable water bills also impact customers for whom water services are affordable via higher water rates to recover the costs of services that go unpaid by lower income households.

Measuring Household Affordability for Water and Sewer Utilities

“…A simple binary declaration follows this standard: if a utility's average bill as %MHI is less than this standard, then it is deemed “affordable”; if it is greater, then it is “unaffordable.” Sometimes these %MHI standards are applied separately to water and sewer rates; at other times, they are combined water plus sewer costs. Often used but rarely considered carefully, the 2.0 or 2.5%MHI (4.0 or 4.5%MHI combined) standard has become the default basis for analyzing water and sewer affordability in recent published research (Mack & Wrase , Janzen et al ), with no other rationale than that it is convenient and conventional. Utility rate analysts typically follow suit; the University of North Carolina Environmental Finance Center's Water and Wastewater Rates Dashboard uses the %MHI method to guide rate design, for example (https://efc.sog.unc.edu/reslib/item/north-carolina-water-and-wastewater-rates-dashboard).…”

Advancing methods for research on household water insecurity: Studying entitlements and capabilities, socio-cultural dynamics, and political processes, institutions and governance

“…Analyses of affordability in the United States, for instance, typically calculate average residential water bills as a percentage of median household income, with values of less than 2.5% declared “affordable” (e.g., Janzen et al 2016; Mack and Wrase 2017). Internationally, the United Nations Development Program defines affordable water as that which costs no more than 3–5% of a household’s income (Hutton 2012, Smets 2012).…”

Measuring Human Water Needs

“…New approaches attempt to capture the relative cost of water as it trades off against other household resources and needs (eg, labor time and effort) (Wutich et al, , p. 3). Alternative measures would use affordability calculations that address, for instance, consumption levels and the affordability benchmarks (Gawel, Sigel, & Bretschneider, ; Mack & Wrase, ; Smets, ), as well as the direct costs and labor time for water treatment and storage management (Vandewalle & Jepson, ). Such alternative measures are being developed to address the wider range of costs and tradeoffs involved in water affordability, but these are not yet widely used and may be particularly difficult to apply in informal economies and field settings (Davis & Teodoro, ; Hutton, ).…”